US Economy Grows 3.9%…More Proof That Numbers Lie

Here’s good news, dear reader. The US economy grew at a 3.9% rate in the third quarter. Numbers don’t lie, do they?

Ha! Numbers are the biggest liars on the planet.

Have you noticed how the whole world has been taken over by numbers? We live with them every day. They seem so precise…so confident…so sure of themselves. The US economy did not grow “a little bit”. It did not expand “slightly”. It is not now just “somewhat larger” than it was a year ago. And it’s not even growing at a 3% rate…or a 4% rate. It’s growing at a 3.9% rate.

The older we get, the more suspicious of numbers we’re becoming.

A man today knows his PIN number, his telephone number, often his fax number, his credit card number, his cholesterol number, his street number, his postcode…digits, digits, and more digits! He’s likely to know batting averages of his favourite players…and how much his portfolio increased last year…not to mention the standard numbers of a general education – how many states are there, how many members of Congress, what is the boiling temperature of water, what is the speed of light…how many times can you get a speeding ticket in the state of Georgia before they take away your licence…and so forth.

Some of these numbers are useful. Many are empty frauds.

When the feds give us a number for GDP growth, for example, what does it mean? Why, it means the economy is expanding…growing…getting bigger. Oh…and what does that mean?

We apologise to long-suffering Daily Reckoning readers, but we will bring out a familiar example: If we cut our own lawn, the GDP is unchanged. If we hire a lawn-cutting service to do the work, the GDP expands. So, what does it really mean to say the GDP grows? In both cases, the end result is exactly the same: the grass has been cut. The only difference is that an amount of money – a number – has changed places, from our pocket to someone else’s. The world has no more money. The world has no more goods or services. The world is unchanged. So what does GDP growth really mean? And how could a precise number – 3.9% – ever hope to describe what has really happened?

To make matters worse, government statisticians – and corporate ones too – typically “crunch” numbers into the shape they want. Numbers get punched, beaten, hammered, bullied, and bamboozled. When the torture session is over they’ll admit to anything. That is how we get a “consumer price index” of only 3%…when everyone knows prices are rising a lot faster.

Bill Bonner

Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.

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